What is the procedure for declaring personal income tax exemption on income from real estate in Vietnam?

What is the procedure for declaring personal income tax exemption on income from real estate in Vietnam?

According to the regulations specified in Section 4, Part 2, Appendix Administrative Procedures amended and supplemented in the field of tax management under the functional scope of the Ministry of Finance issued together with Decision 2780/QD-BTC in 2023, the procedure for declaring personal income tax exemption on income from real estate is as follows:

Step 1. The individual transferring real estate subject to tax exemption (including future housing and construction works) prepares and submits the tax exemption dossier along with the tax declaration dossier according to regulations at one of the following places:

- The inter-agency one-stop section or;

- The Tax Department where the real estate is located.

If the local area has not yet implemented the inter-agency one-stop mechanism, the dossier is submitted directly to the Land Use Rights Registration Office where the real estate is being transferred.

In cases where individuals transfer housing or construction works formed in the future, they must declare and pay personal income tax at the local Tax Department where the housing or construction works are located.

Step 2. The tax authority receives the dossier:

For direct submissions at the tax authority or submissions sent via postal service: the tax authority shall receive and process the dossier as regulated.

For submissions to the tax authority through electronic transactions, the receipt, inspection, approval, processing of the dossier, and result delivery are carried out through the tax authority's electronic data processing system.

For cases of transfer, inheritance, or gifting of real estate (including future housing, future construction works, construction works, housing transferred by the project owner but have not yet received the certificate of land use rights, housing ownership, and associated assets as regulated by the housing law and real estate business law) between:

- Spouses;- Parents and children (biological and adoptive);- Parents-in-law and children-in-law;- Sons-in-law and daughters-in-law;- Grandparents and grandchildren (both paternal and maternal);- Siblings.

The tax authorities are responsible for exploiting information in the National Population Database as stipulated in Article 84 of Circular 80/2021/TT-BTC to resolve the tax exemption procedure for the taxpayer.

If the extraction of residency information of the citizens from the National Population Database cannot be carried out, the taxpayer must provide relevant documents to determine the tax exemption eligibility in each specific case.

Step 3. The tax authority reviews the dossier and returns the result according to regulations.

What is the procedure for declaring personal income tax exemption on income from real estate in Vietnam? (Image from the Internet)

How to apply for personal income tax exemption on income from real estate in Vietnam?

According to the regulations specified in Section 4, Part 2, Appendix Administrative Procedures amended and supplemented in the field of tax management under the functional scope of the Ministry of Finance issued together with Decision 2780/QD-BTC in 2023, the personal income tax exemption on income from real estate can be applied through the following methods:

- Direct submission at the inter-agency one-stop section or the Tax Department where the real estate is being transferred, inherited, or gifted, or at the Land Use Rights Registration Office where the real estate is located (if the local area has not yet implemented the inter-agency one-stop mechanism);

- Or sending via the postal system;

- Or sending electronic dossiers to the tax authority through electronic transactions (the electronic information portals of the General Department of Taxation, authorized government agencies, or T-VAN service providers).

How to declare personal income tax on income from real estate transfer in Vietnam?

Based on Clause 3, Article 26 of Circular 111/2013/TT-BTC, the personal income tax declaration on income from real estate transfer is as follows:

- Individuals with income from real estate transfer shall declare tax for each transaction, even if they are subject to tax exemption. Specific tax declaration cases include:

+ If individuals with land use rights, housing ownership use them as collateral, guarantee for loan, or repayment at credit institutions or foreign bank branches, and they are unable to repay the loan by the due date, the credit institutions or foreign bank branches will handle and sell the real estate. They must declare and pay personal income tax on behalf of the individuals before settling personal debts.

+ If individuals with land use rights or housing ownership use them as collateral for loans or repayments to other organizations or individuals, and now they transfer all (or part of) the real estate to settle debts, the individuals with land use rights or housing ownership must declare and pay personal income tax, or the organizations or individuals handling the transfer must declare and pay personal income tax on behalf of the individuals before debt settlement.

+ If the real estate is transferred to another organization or individual by the individual's court ruling, the individual must declare and pay tax, or the organization or individual handling the auction must declare and pay personal income tax on the individual's behalf. However, real estate confiscated by government authorities and auctioned off to the State Treasury does not require personal income tax declaration or payment.

+ Real estate exchanges between individuals, not falling under agricultural land conversion cases eligible for personal income tax exemption as guided in Point d, Clause 1, Article 3 of Circular 111/2013/TT-BTC, must be declared and paid by each individual involved in the exchange.

+ If another organization or individual declares tax on behalf of a taxpayer for real estate transfer activities, they must add "Declared on behalf" before the phrase "Taxpayer or Legal Representative" and the signee must clearly state their name. If an organization declares, it must stamp its seal. The tax calculation documents and tax receipts must still indicate the actual taxpayer as the individual transferring the real estate.

- Real estate management authorities can only handle ownership and use rights transfer procedures when personal income tax receipts or tax authority confirmations on tax-exempt or delayed tax income from real estate transfer are available.